CMS issued its Hospital Inpatient Prospective Payment System final rule Aug. 1, which boosts inpatient hospital pay 3.1 percent in 2024. The plan was met with criticism from hospital groups, which say the payment update is inadequate.
Here are three reactions to the final rule:
America's Essential Hospitals: Today's final rule for the fiscal year 2024 Inpatient Prospective Payment System will undermine the nation's essential hospitals and safety net care for low-income and marginalized patients with its harmful policies on disproportionate share hospital (DSH) funding.
We are disappointed [CMS] finalized an even deeper cut to DSH payments than initially proposed. Further, the finalization of a new policy to exclude uncompensated care (UC) pool days from the Medicare DSH calculation will disproportionately harm essential hospitals in states with UC pools and ultimately decrease DSH payments to hospitals nationwide. The cumulative damage of these policy changes will weaken health equity efforts and, ultimately, hospitals that rely on Medicare DSH funds.
We are pleased CMS shows interest in defining and supporting hospitals that provide safety net care, and we look forward to continued collaboration with the agency to achieve this goal, including by reversing damaging payment policies.
American Hospital Association: The AHA is deeply concerned with CMS' woefully inadequate inpatient and long-term care hospital payment updates. The agency continues to finalize rate increases that are not commensurate with the near decades-high inflation and increased costs for labor, equipment, drugs and supplies that hospitals across the country are experiencing.
Moreover, CMS finalized a cut in inpatient hospital disproportionate share hospital (DSH) payments for hospitals that treat many of the most vulnerable patients of almost $1 billion. This staggering amount is based on CMS' Office of the Actuary's estimate that the rate of uninsured will decline from 9.2 percent in FY 2023 to 8.3 percent in FY 2024. This is an inexplicable assumption given that the Department of Health and Human Services itself estimates that 15 million individuals will leave Medicaid once the continuous enrollment provision comes to an end, only one-third of whom will be eligible for Marketplace subsidies.
We are also disappointed that CMS finalized its proposal to limit the inclusion of patient days for patients who are regarded as eligible for Medicaid benefits under a Section 1115 demonstration project for purposes of the Medicare DSH calculation. This policy could have a devastating impact on access to care for lower-income patients by curtailing much needed resources used to finance health care in historically marginalized communities.
In addition, while we appreciate CMS adopting some of our suggested improvements in its long-term care hospital outlier threshold calculation, it still finalized a figure that is 55 percent higher than it is currently. Most long-term care hospitals cannot afford to absorb such financial losses. We are concerned it will harm their ability to care for the sickest patients — a population they provide care for already at a considerable financial loss.
Federation of American Hospitals: The cost of patient care continues to rise while the modest increase in the IPPS inflation update compared to the proposed rule falls far short. The CMS regulation issued today ignores the real-world inflationary challenges facing patient care from escalating labor costs, drug prices, and expensive supply chain breakdowns. At the same time, CMS' 3 percent forecast error in FY 2022 permanently depresses payment.
A further handicap to the inflation update shortfall is CMS cutting mission-critical uncompensated care payments by more than $900 million.
This final rule further strains the health care safety net in 2024 and threatens patient access to care.